Direct Mail and the Long Term ROI
One of the cornerstones for measuring the success of any direct marketing project is certainly the return on investment (ROI). For instance, if you invest $10,000 into your direct mail campaign, and subsequently make $15,000 in sales that can be directly attributed to the effects of the mailing, then you would have achieved a solid $5000 return on investment, or 50%.
This kind of measurement is certainly important, but I think that sometimes our approach to ROI can be somewhat limited. When talking with people about direct marketing, one of the things that we hear far too often is this:
Direct mail? Yeah I tried that once. It didn’t really work.
There is an obvious issue with this statement, and it has to do primarily with frequency. Direct mail isn’t something that you can really try just once. In the vast majority of cases, it requires consistent repetition to really start delivering results and generating leads. But that’s a different discussion altogether.
What I find even more interesting in this statement is that the willingness to try direct marketing only once suggests a certain impatience with the whole process. Given this, I wonder if that same impatience comes to bear when measuring the campaign ROI? If it does, they may not be seeing the whole picture.
Allow me to illustrate what I mean with a real life example.
Last year, we did a relatively small internal mailing to a very specific target market, in an effort to promote our services. The mailer featured a unique Roundcard design, intentionally crafted to appeal to this specific market. It was also accompanied by some additional literature, and created a nice, attractive package.
After going out, the initial response to the mailing was somewhat lower than we had originally hoped. Of course, it’s always somewhat disheartening when this happens, but one of the calls that we did receive turned out to be very important, though we didn’t necessarily realize it at the time.
The individual who contacted us had received our piece and was interested in doing a mailing of their own. So, we worked together with them, helping them through a number of the critical stages for their project development. We ultimately saw the mailing through to a satisfactory conclusion, sent it out the door and were generally pleased with the results that the client achieved through the project.
We were certainly happy to have the new client, but the process didn’t strike us as all that extraordinary. It was just a matter of us doing what we do best.
As it turned out, though, this new client was actually one branch of a much larger organization (something we were actually unaware of). After the initial mailing went out, our name was passed up the chain of management, and sometime later we got another phone call from the larger organization requesting a meeting. As a direct result, we ended up being involved in several more projects for some of the organization’s other branches.
Moreover, through these other projects, we were introduced to one of the organization’s other vendors, who specialized in marketing within a particular niche. We worked closely with this vendor on one particular project, and very much enjoyed the relationship, which continued to grow and evolve, even once the initial projects had been completed. This has, in turn, resulted in further opportunities.
All that being said, we can now look back and actually trace a wide range of projects that have come our way as a direct result of that original promotion. Plus, we are confident that the relationships that we have established will continue to grow, resulting in more work down the road.
When we combine all of that together, the long term ROI of our initial mailing actually ends up looking a lot better than it may have initially appeared. It was just a matter of being patient and understanding that the highest levels of ROI can often take some time to fully manifest.
Of course, I recognize that some level of immediate ROI is desirable, as businesses want to at least break even over the short term and recover the money that they spent on marketing. If we’re not getting at least some level of initial return, it can be difficult to not feel discouraged, or tentative about launching into any further direct marketing efforts.
As I mentioned above, however, a lot of direct marketing takes both time and repetition to really establish a viable foothold. I cannot help but wonder if some marketers are not ultimately missing out on incredible opportunities because of their own impatience, and a failure to fully recognize the value and importance of long term ROI.
What about you? How do you track your ROI? Do you focus more on immediate results or do you continue to track it over the long term?
I would like to conclude with one more story that Dave often tells (with names and details removed, of course). As the story goes, there was a salesman/marketer working for a company who sold very expensive products to very large organizations. This salesman took it upon himself to mail out very high end marketing packages to about 250 prospects. Weeks and months went by without a single call, and his boss was starting to give him a bit of a hard time.
Then, after six months, one very large new client came calling as a direct result of the mailer, and the salesman’s company closed the single largest contract that they had ever landed. How’s that for long term ROI?
